The new law implements two important European Union regulations – the Markets in Crypto-Assets Regulation (“MiCA”), which regulates the crypto assets market, and the Digital Operational Resilience Act (“DORA”), which adjusts the resilience of the financial sector as a whole. This legislation therefore introduces entirely new rules for the previously unregulated crypto-asset market and simultaneously designates the Czech National Bank (CNB) as the supervisory authority for this sector.

With the approval of the new Act on Digital Finance, the CNB, as the regulator of this new area, is gaining many new powers and responsibilities. It will be the CNB that oversees compliance with the rules, keep records of entities providing services related to crypto assets and issuing tokens, as well as granting operating licenses. The Act, along with both European regulations, aims to make the cryptocurrency market more regulated, stable, and secure, primarily to protect consumers.

Inspection duties of the Czech National Bank

The CNB’s inspection obligations include, among other things, the obligation of crypto-asset service providers who store their customers’ funds to ensure that the protection of entrusted funds is verified by an auditor at least once a year. These entities are also required to submit certified financial statements to the CNB.

This inspection activity also applies to the information-sharing requirements. Token issuers and crypto service providers must share the information needed to assess “prudential” requirements. However, the exact form, deadlines, and methods of such verification have not yet been specified, as these will be determined later by the CNB itself.

Another duty of the CNB will be to maintain a register of token white papers on its website. A white paper is a document that introduces a token to the public, describes its characteristics, and outlines its potential use cases. The website will also list all token issuers and crypto-asset service providers operating in the Czech Republic.

Professional competence Requirements

The Act also sets out the requirements for professional competence for providing advice in the area of crypto-assets. Professional competence is defined as the ability to explain the nature of crypto assets to clients, offer relevant recommendations, and demonstrate knowledge of applicable regulations.

This knowledge is then described in more detail as knowledge in the scope of the professional minimum on the financial market, basic knowledge of entities offering services with crypto-assets and the functioning of the crypto market as a whole, and knowledge of the regulation of offering crypto-assets and services related to them. It is interesting that the law also includes ethical standards as part of professional competence.

However, the regulation of the requirements for professional competence seems somewhat vague so far. For example, it does not define what ” knowledge in the scope of the professional minimum ” means or whether we need to include knowledge of all crypto-assets offered to the public, or only those on which we advise. It is not only for this reason that it is likely that the law will be gradually supplemented in the form of a practical interpretation.

The CNB’s supervisory and investigative powers

For these powers, the Act refers primarily to the MiCA Regulation, specifically Article 94. This Article includes, inter alia, the following investigatory and supervisory powers:

• Request the provision of information and documents from any person that the supervisory authority finds important for the performance of its supervisory and regulatory activities.
• The right to authorize auditors to verify or investigate.
• The right to suspend or prohibit the provision of crypto-asset services, while requesting the transfer of existing contracts to another service provider. In extreme cases, order the immediate cessation of activities without prior notice or setting a deadline.
• The right to require modifications to promotional communications issued by service providers or token issuers, or to request amendments to token white papers.
• Prohibit the public offering and trading of cryptoassets on the trading platform.
• Request the removal of an individual from the board of directors of a token issuer.

If the supervisory authority lack effective means to ensure an end to regulatory violations, it may also request third parties or public authorities to implement the necessary measures. These may include web hosting providers, public registries, or domain administrators.

These are just a few of the powers that the CNB will acquire under this Act, and it is clear that they enable thorough and extensive monitoring and regulation in the crypto-asset market.

Sanctions and offences

Regarding possible sanctions and offenses, the law partly refers to the MiCA regulation, but some are also directly included in the Czech law. Among other things, the law describes the right of the CNB to repeatedly impose an enforcement fine of CZK 5 Within the meaning of this Act, the CNB therefore acts not only as a supervisory authority, but also as a sanctioning authority. However, the subsequent enforcement and collection of fines are carried out by the customs office.

Implementation Timeline

The amendment to the law was recently signed by the President and officially entered into force on 14 February 2025.

By implementing this law, the Czech Republic has secured its leadership in the legislative area of digital finance, at least in Western countries. This places the CNB at the forefront as a regulatory and supervisory authority. This leadership is also supported by the CNB’s interest in including Bitcoin in its strategic foreign exchange reserves.

In conclusion, the current period is quite turbulent for the cryptoasset markets, not only in terms of volatility and price growth itself or the new U.S. president’s approach to cryptocurrencies, but also due to a number of new measures in legislation. In addition, the European Union is currently negotiating the DAC 8 directive, which is focused on transparency and improving the exchange of information on the crypto-asset market.

All these legislative changes will have a significant impact on the overall crypto-assets sector and its future development. The current changes are more of a legislative (legal) nature and there are no significant changes in the area of taxes, apart from the introduction of a time test and a value limit for the exemption of income from the transfer of crypto-assets for individuals. However, further changes can undoubtedly be expected in the future, making it crucial to stay prepared. We will continue to monitor developments in this area on your behalf.